Jerry Yang Is Desperately Trying To Keep Control Of Yahoo And It's Angering Insiders

A source close to people in Yahoo management is very unhappy about cofounder and board member Jerry Yang’s plans for Yahoo.Yang wants to do a deal where Yahoo would issue a bunch of new stock and then sell it to a selection of private equity firms allied to his interests. Yahoo would then use the proceeds from that sale to buy Yahoo stock back from the public. This would consolidate his control of Big Purple. This is called a PIPE deal.

“The whole scheme is so Jerry can remain in control. It’s not good for anybody,” says our source.

Our source has three complaints.

One is that Jerry Yang is the last person who should have control over Yahoo. He didn’t do a very good job running the place last time.

Another complaint is that the deal won’t actually create value for current Yahoo shareholders. “[Yahoo] is going to get sued out the yin-yang [by shareholders like] Dan Loeb.”

This source’s final complaint is that the deal will screw over the Yahoo rank and file – causing even more of them to quit.

“For the rank & file it’s going to dilute them dramatically and there is not hope of an exit. It will take away any liquidity they have. People are going to flee.”